What is invoice discounting?
Invoice Discounting
When you discount your invoices, you retain responsibility for collecting payment.
This is in contrast with invoice factoring, where the factor collects the debt for you - issuing statements and chasing customers.
Invoice discounting is a confidential facility, your customers continue to pay you directly as normal and are never likely to be aware that you are using this form of business finance.
Good for: Discounting is suited to mature businesses that have good systems of control and reporting. You must be able to demonstrate effective credit control processes and be able to provide accurate management information in a timely manner.
Invoice discounting - FAQs
What is invoice discounting?
Like factoring, invoice discounting allows you to use your invoices as collateral in return for ready cash.
However, unlike factoring, invoice discounting gives you the option to handle your own credit control processes and keep the lenders involvement confidential.
This is generally a good option for companies which have developed strong relationships with their customers that they wish to maintain.
Why should I use confidential invoice discounting?
Invoice discounting gives you fast access to cash you’re owed, helping to improve cash flow so you can run your business smoothly and efficiently while building working capital.
Unlike a traditional overdraft or loan, it grows in-line with your turnover making this model of commercial funding a flexible solution for managing your cash flow.
Do I need to provide any security?
Because invoice discounting is secured against your invoices there may not be any need for additional security.
How long does it take to set up invoice discounting?
An invoice discounting facility can be set up in a matter of days, but it is very dependent on the size and complexity of your application and how quickly we get the information that the factoring company needs to them.
What happens if my customer doesn’t pay an invoice?
If your client doesn’t pay within the agreed period, also known as the recourse period (which is usually 90 days), funding will be removed.
How much does invoice discounting cost?
Every agreement and facility is different. The cost to your business will depend on your needs and the services you choose to use. If you would like discuss how invoice discounting could work for your business, and get an idea of costs, get started now.